Don’t Repeal Obamacare, Transcend It

When it comes to Obamacare and the 2014 midterms, the GOP appears to have a fairly simple strategy: Keep the target on the other guys. After all, the president’s health law is persistently unpopular, leading many Republicans to conclude that there’s more risk than reward in telling voters what they’d do differently. The “prevent defense” will probably work this time, but it won’t work forever.

According to the Congressional Budget Office, in 2016 there will be 34 million U.S. residents on Obamacare-sponsored health insurance: 22 million on the law’s health insurance exchanges, and 12 million enrolled in its expansion of Medicaid. It’s certainly possible that the CBO’s estimates are too high. And not all of those 34 million people will have been previously uninsured. But the 2016 election is shaping up ominously for the GOP.

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Imagine this scenario: The Republican presidential contenders spend 2015 and 2016 competing with each other to see who can denounce Obamacare—and pledge to repeal it—in the most full-throated terms. If you thought Mitt Romney’s “self-deportation” comment was bad in 2012, wait until Hillary runs ads aimed at the tens of millions of voters whose health coverage would be disrupted by repeal.

Republicans aren’t stupid. They know that repealing Obamacare will be a tough political sell outside the conservative base. But they’re stuck between a rock and a hard place. Failing to repeal the Affordable Care Act, they believe, doesn’t just mean they’ll run afoul of the Tea Party. It means that they will have accepted the permanence of Big Government, of European-style welfare statism.

It turns out that this isn’t true. Conservatives don’t have to repeal Obamacare in order to advance their principles. Indeed, it’s actually possible to take advantage of one of the law’s core provisions—its tax credits for the purchase of private coverage—to reform America’s entire health-entitlement behemoth, and to finally put the country on a fiscally stable trajectory.

Rep. Paul Ryan’s proposal to reform Medicare—giving future retirees “premium support” subsidies to shop for private health insurance—is, in fact, quite similar to Obamacare’s usage of “premium assistance” tax credits to offer coverage to the uninsured. So what if we used Obamacare to reform Medicaid and Medicare, by gradually migrating future retirees and Medicaid recipients onto a reformed version of Obamacare’s exchanges?

I ran the numbers. In a new white paper published by the Manhattan Institute, we estimate that, by 2023, this approach could reduce the deficit by more than $8 trillion over three decades, while also reducing taxes. That’s more than enough in savings to make the Medicare trust fund permanently solvent. Not solvent for another six or eight or 12 years—but forever.

Other reforms in the plan would allow insurers to offer less costly coverage on the exchanges, making health insurance more affordable for the tens of millions of Americans who will remain uninsured under Obamacare. Indeed, we estimate that under the plan, by 2023, 12 million more Americans would have health coverage than under the unreformed Affordable Care Act.